Stock Market “Losses” Make Real Estate “The Big Winner”

    This past week was a head-swiveling version of a follow-the-dots puzzle for those who keep tabs on national news related to the US financial situation and how it might effect Real Estate.  The news from the previous 7 days was kind of like following the numbered dots on an old school puzzle, to slowly reveal a picture.  You really can’t be sure what it will turn out to look like until almost the very end.  Let’s quickly recap why last week is going to be one to remember:

    Monday led off with the release of housing-builder sentiment: its best reading in 10 years! It was given credit for reversing an early-day 100+ point stock market drop.  When the Dow closed up 68 points for the day, Real Estate performance got the kudos.  Despite many segments and large blue-chip companies getting crushed on share prices, it was Real Estate that was left standing… untarnished and taking the lead for the late day rally!

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    Monday’s dot connected to the next one, which appeared as USA Today’s early Tuesday dispatch pointing out that the previous day’s market rescue by the Real Estate Sector was hardly a flash in the pan.  The Money section’s lead story, “Housing Provides Much-Needed Lift to Wall Street” drew a broader picture.  In a ho-hum year for the broader stock market, housing-related stocks were uniformly “among the best-performing shares.”  The S&P 500 may have been up less than 2% for the year, but homebuilders’ shares were up 13%; home-improvement retailers, 11.1%; home furnishings stocks, a blistering 26.1%!  The reason was “the power of the resurgent real estate market to generate positive action in the stock market.”

    Then, on Wednesday, CoreLogic provided the next dot with its release of the August MarketPulse roundup, pointing to a 6.5% increase in its national home price index.  This was the logical next dot—one that was hardly unexpected.  The predicted continuation of price increases was again explained by lean inventories, continuing low mortgage rates, and consumer confidence rated “the most optimistic in eight years.”  (We outlined this heavily in one of last week’s blogs.)

    Thursday’s dots had been anticipated, too: the morning announcement of July existing home sales marked the 41st consecutive month of year-over-year price gains.  Volume was up, too, as sales topped an annual level of 5.5 million for the first time since early 2007.  TheStreet took that as “just the latest confirmation that the housing nightmare is mostly over.” (also covered in last week’s blog)

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    By Friday, the last dots appeared in calm contrast to the frenetic news from Wall Street, which completed its worst week in five years. Even the real estate industry stocks which had rescued the day on Monday couldn’t buck the outrushing tide of equity losses.  But the last dot for Baltimore area real estate watchers was found in the analysts’ post mortems after the market’s close, as speculation increased that the carnage on Wall Street might well be sufficient to nudge Federal Reserve decision makers away from raising interest rates in September.  Real estate trackers were able to put their pencils down and relax for the weekend.  This could set Real Estate prices to soar if interest rates can maintain their all time low, into the foreseeable future.

    So, what was the picture the follow-the-dots puzzle revealed? The real estate industry dots seemed to trace a simple circle…with a curved line near the bottom that looked a lot like a smile.  That may sound “corny”, (and it is), but it is also very true.  The moral of the story is the that the recent stock market losses, is making Real Estate, THE HUGE WINNER!

    Whether or not this fall’s Maryland real estate offerings continue to benefit from historically low mortgage interest rates (BTW…they dropped again last week!), there are definitely many great opportunities for home buyers and sellers alike.  Turn to ExecuHome Realty, Maryland Own Real Estate Company, for ALL of your Real Estate needs… WE CAN’T WAIT TO HELP!  Call us today at 443-632-3800!

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